In this podcast, NAB Chief Economist, Alan Oster gives you a 10 minute summary of our analysis of consumer spending.

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Highlights

• The generally slowing trend in consumption growth continued in the week ending 6 March 2021, although we are now squarely approaching the pointy end of the one-year anniversary of the onset of the pandemic. This means that year-on-year growth figures will begin to reflect the dramatic base effects from that period.
• Consumption spending clocked in at 6.7% y/y last week, while business inflows have also lost momentum recently, although remain positive overall. NAB business inflows stood at 8.2% growth in 6 week rolling y/y terms. Without JobKeeper this growth was likely around 7.9%.
• Attached to this report is an in-focus note on spending trends in CBDs compared to metropolitan areas more broadly. For more information see the attached note.

NAB Chief Economist, Alan Oster commented

The generally slowing trend in consumption growth continued in the week ending 6 March 2021, although the significance of this is increasingly limited when using year-on-year growth figures. We are now not far off a year from the first wave of pandemic-induced panic buying at supermarkets and collapse elsewhere as first wave lockdowns came into force. This will severely limit the usefulness of data expressed in these terms.

In index terms, for the week ending 6 March 2021, the overall series (+120) was above its level at the same time in 2020 (+107). The overall index has been above the retail index in recent weeks, driven by spend on construction, utilities, health, education, and professional services. Overall, consumption grew 6.7% y/y last week. Retail was up 4.8% y/y last week, while hospitality was up 14.2% y/y. However, given both of these figures are being referenced to a base period at the onset of the pandemic (coinciding with the emergence of supermarket panic buying and a decline in hotel spending), caution is urged.

On a state basis, growth was strongest in WA and Tas (7.9%), followed by Vic emerging from the circuit breaker, up 7.3%. Qld was up 6.5%, NSW 6.3% and SA 6.1%, while the territories recorded slower growth.

NAB business inflows grew 8.2% on 6 week rolling average y/y terms. Sans JobKeeper, this would have been around 7.9%, demonstrating that the program is now having a relatively small impact overall (but remains important for some areas).

By size, small businesses were up 21.4%, followed by emerging at 15.8%, large 9.4%, medium 2.5% and corporates at 0.2%. Without JobKeeper, small businesses would be at around 20.7% growth, emerging 15.3%, medium 2.3%, large 9.3% and corporates would be unchanged.

Our special report this week on CBDs this week shows that while it comes as no surprise that accommodation, cafes and restaurants and pubs and bars remained well below pre-pandemic levels in Melbourne in February (particularly given the five-day “circuit breaker” lockdown), the extent of weakness in other Australian CBDs was higher than we expected. For example, pub and bar spending stood at 53% of October 2019 levels, but the other CBDs were likewise below pre-pandemic levels – even Perth, which had been on a CBD drinking spree in the second half of 2020.

For further details please see NAB data insights 6 March 2021 and In focus CBDs March 2021